THIS IS A SPAN TAG. Despite statistics suggesting a decline in U.S. dynamism, technology has been known to disrupt incumbents when they least expect it. Cloud computing may ultimately prove to be one of those disruptive forces.
- from “Research: Cloud Computing Is Helping Smaller, Newer Firms Compete” by Nicholas Bloom and Nicola Pierri

New research conducted by Stanford economist Nicholas Bloom and doctoral candidate Nicolas Pierri shows unprecedented rates of adoption for cloud-based services. This is spreading computing capabilities to hundreds of thousands of firms across the nation. In “Research: Cloud Computing Is Helping Smaller, Newer Firms Compete,” Professor Bloom and Mr. Pierri summarize their research findings: The growing availability of convenient, seemingly endless cloud-based digital storage and services is “democratizing computing.”

Below are a few excerpts from “Research: Cloud Computing Is Helping Smaller, Newer Firms Compete:”

Is digital technology a democratizing force, allowing smaller, newer companies to compete against giant ones? Or does it provide even greater advantage to incumbents? That question has gotten a lot of attention lately, in response to data showing that the rate of new business creation in the U.S. has slowed, and that in most industries the biggest firms have higher market share than they did a decade ago.

Despite those trends, our research suggests that technology can in fact provide an advantage to small and new firms. In recent research, we studied the adoption of cloud computing across U.S. businesses.

Cloud computing is an IT paradigm based on remote access to a shared pool of computing resources.

Putting data “in the cloud” essentially means paying someone else to manage it, and then connecting to their servers via the internet to access your data when you need it.

It also means you don’t need to analyze these data on your own machines, but you can “rent” them on demand.

The popularity of cloud computing has exploded during the last half a decade. By cutting the fixed costs of computing — avoiding the need to hire IT staff, servers, and hardware — even the smallest firm can satisfy large and unexpected computing needs.

For example, KenSci is a small Seattle-based healthcare analytics company, which uses machine learning techniques to analyze hundreds of variables about patients’ conditions to provide real-time predictions about mortality, readmissions, and other health-related risks. Relying on the cloud, KenSci has been able to quickly scale up and offer its services worldwide, without building a sizeable IT-infrastructure beforehand. The computational agility of cloud computing has been playing a role in manufacturing as well, fostering the creation of new “smart’” products. Pivothead is a firm with 25 employees producing wearable technologies to help the blind and visually impaired. Information collected by the wearable sensors are sent to the cloud, processed through machine learning algorithms, and transformed into speech or text, in order to help the client navigate the surrounding environment.